Credit cards make your life a whole lot easier, by making it possible for you to travel without cash and, in some cases, entirely free. After all, you’re getting rewards just for buying things that you would be buying anyway, right? They’re so easy!
Well, when it comes to that credit card you need to worry about your credit score and that’s kind of like your health. You want to make sure you’re watching out for any signs of a problem, that you’re taking care of the score itself and that you’re making the right kind of choices.
You’re also going to see that your credit score can hurt. It can bring about debt problems and that means you need to pay really close attention to what you’re doing.
We’re going to go over a total of 19 different things that you could be doing to help you make the right decisions about your credit cards.
1. Make Sure You Can Pay It Off
If you’ve ever seen a college student end up making a whole lot of charges on their credit card assuming that eventually, they’ll make enough to pay it off you’ve seen the problem with this one. Students end up in more debt than they know how to deal with. Even thousands of dollars and that can affect credit scores dramatically. That’s because the debt load that you carry is actually responsible for 30% of the credit score that you get. If you’re charging a lot of things and not paying them off at the end of the month you’re going to end up with a bad credit score to start yourself out with.
You want to make sure that no matter what else you’re doing you only charge items that you can afford to pay off that same month.
This is going to make sure that you don’t increase your credit score, but it’s only really going to happen if you know how much you’re spending and that you aren’t going over your self-imposed limits.
2. Choose Your Card Right
You may think that getting one credit card is the same as getting any other, but that’s actually not the case at all. You want to look at where you tend to buy with your credit card and then get a card that’s going to give you the most benefits for that type of spending.
If you use it everywhere you go then a general-purpose card might be the best option. If you use it only on Macy's you might want a Macy's card that gives you more benefits for those purchases. If you spend it on travel then a travel rewards card is a good idea, and so on.
3. Make the Payments Automatic
Automatic payments are going to make sure that you don’t have to worry about forgetting when that payment is due.
You’ll be able to set these up directly through your bank and the credit company. That way, your payment gets automatically deducted every single month and you can simply keep on going about your life the way you have been. You don’t have to worry about the day your payment is due other than to make sure the money is in your account.
These can be great because they’re going to make it practically impossible for your payment to be late. That means you won’t have to worry about the charges that get tacked on when you have a late payment. And you’re going to have no problem keeping track of the payments because your bank is actually doing all of it for you.
4. Get Frequent Alerts
There are actually alert options with just about any type of credit card that will let you decide when you want to know what’s going on. These alerts can tell you about large purchase amounts or about when you’re getting close to a set percentage limit that you want to set.
Some of them are pre-set by the company and some are all about whatever you want to say about them.
5. Get the Most with Credit Card Rewards
Rewards cards are a great idea if you’re already using a credit card to pay for basically everything anyway. These cards are going to help you get something back for the purchases you’re making and that could be cash, retail points, airline miles or a number of other things.
If you’re the type of person who is getting the maximum number of points from making purchases and then using those points for the things that you would buy anyway then you’re definitely making the most out of this game and you’re going to be getting the best results overall. That’s definitely going to be a good bonus.
Of course, you need to make sure that you’re paying off the card in full every month or you’re not going to be making much of anything. Adding a whole lot of interest on top of your charges is only going to serve to put you further and further in debt and you’re not going to be getting a benefit out of the rewards that you’ve earned.
6. Don’t Cancel Your Old Credit Cards
Keeping credit cards open without a balance is going to be a great idea. That means when you manage to pay off that credit card you want to make sure that you’re still leaving it open and letting it improve your credit utilization.
Another thing that it’s going to do is increase your age of credit history. If you have older cards especially you want to make sure you keep them open because they’re going to make that history longer and that’s going to increase your credit score a little bit more. If you close that card your history gets shorter on average and your score could decrease.
Back to that credit utilization you have less available credit when you close an account. That means, by default, the amount of credit that you’ve spent is now a higher percentage and that’s going to decrease your score.
Now, on the other hand, if you have a card that you’re not using, that has a $0 balance and that’s charging you an annual fee that might be the one time you do want to close the account. After all, you don’t want to be paying for a card you’re not even getting anything out of, right?
7. Don't Keep Too Many Cards
We’re all tempted by new credit cards every single day because they’re absolutely everywhere. But you don’t want to get new credit cards all the time. They can make it really hard for you to keep track of payments and amounts due and they can definitely increase your chances of actually getting into a lot of debt. For those who are just getting started with debt and credit cards especially they can be a really bad idea.
You want to keep yourself limited to just one or two credit cards instead of really going all out and bringing in a whole lot of cards at once. After all, you’re still getting into the swing of things.
8. Lower Your Utilization
You never want to max out the credit that’s available to you.
If you have a lot of debt and a high balance it’s going to decrease your credit score and that happens as soon as you get over 30-50% credit utilization. You could end up with a lower score and higher interest rates on anything that you have if your utilization starts getting too high.
9. Watch for Fees
One of the biggest ways that any credit card company is going to get money is by charging you fees. In fact, research shows that these companies have made over $163 billion in just 2016 alone. And they get these fees in a number of different ways. And they’re definitely not about to change out that fact. They want to keep increasing their earnings.
So, you want to look at things like annual fees and try to avoid these types of cards. If you can’t avoid a card with an annual fee see if you can get it waived or even reduced. Just asking the question could be enough to get you these perks and you’re never going to know unless you ask them about it.
10. Make the Most of Sign-On Bonuses
Because there are so many different credit card companies out there it’s super difficult for a company to draw in the business that they want. So, they’re willing to give you some different bonuses for signing up for their credit card. In fact, just about any credit card that you sign up for is going to give you a great bonus for doing so.
If you’re going to be signing up for a card anyway there’s definitely no reason you should do it without getting a bonus out of the deal.
Look at all the different ways you can take advantage of those bonuses and then make sure that you’re using your card the right way. You don’t want to counter that bonus by ending up in a lot of debt.
Make sure that you can reach the bonus level though, as most of these cards have requirements in order to get that bonus.
11. Use a Secured Credit Card to Build Your Credit
Secured credit cards are a great way to get your credit portfolio started without having to get a standard credit card.
After all, if you don’t have credit yet these can be difficult to get. You want to make sure you’re making payments on time and that you’re using the card responsibly when you get this card and you’ll be able to upgrade it before long.
12. Skip the Cash Advance
Your credit card is not an ATM. That means you should not be taking cash out of the card that you can use whenever you want. This is called a cash advance and it’s actually extremely expensive.
They have a lot of fees and they start charging interest from the moment you click ‘accept’ on the screen. That means you’re going to be charged high amounts for that money.
13. Use the Grace Period
When your statement is closed out and then when the payment for the month is due is generally a period of time between 21 and 25 days. For those who pay their balance completely before the bill is due it actually helps you stay away from interest and that means paying within that grace period. You just need to make sure that you’re making the most of the period of time you have available.
If you make a purchase at the beginning of a statement period you’re actually going to have a total of 51-55 days to pay it off rather than that 21 to 25 days. That’s going to give you almost a full two months to make the payments and get rid of that charge entirely.
You want to know all about the different ways you can maximize the period of time you have between actually making the charge and then being able to pay it off. That’s going to make things a whole lot more convenient for you.
14. Track Your Spending
Your credit card or bank may actually have a spending analysis tool. This is a little tool online that lets you see what kind of money you’re spending and on what. So, you can see how much you spent the last month on restaurants or travel or clothing. You can even take a look at longer periods of time and check out your general spending habits to find out more.
You want to take a look at this because it’s going to show you where your problem areas are and where you’re doing okay with sticking to your budget. It will also help you with the process of actually creating that budget in the first place.
15. Protect Yourself
Shopping online is fun, but you want to make sure that you’re being careful about it. You don’t want anyone to get your personal information and that means making sure that you’re frequently making changes to your login information.
You also want to make sure that you’re not writing down the information that you’ve used and if you absolutely have to make sure that the information is locked up. You’ll also want to keep from saving your login information in your phone or anywhere else. These things make it far too easy for a hacker to get into your information and make changes you didn’t want.
16. Monitor Your Credit Report
There are three different credit bureaus that are actually creating your credit report. These are TransUnion, Experian and Equifax. You want to make sure that these three organizations, which help to create your credit score, are reporting everything accurately. Lenders are relying on them for their information and to decide if you’re actually a good risk for them to make.
In your report is everything about your credit history including how much you owe, the types of credit you have, how many times you’ve applied for any type of credit in the last two years, if you’re making on time payments and a whole lot more. If the information isn’t right you could get denied for some form of credit that you really need. In such a case, you'll need to fix the errors on your credit report.
You want to take a closer look at the report you have at least yearly and actually you can get one of each of the reports once a year.
That means you can actually check your credit report every four months to find out more. You just need to go to annualcreditreport.com to find out more and get the copies that you need for your review.
17. Don’t Apply for the Heck of It
It can be tempting to apply for a lot of credit because you feel like it’s going to help you get better credit quickly. That’s absolutely not the case. When you get prescreened for a type of credit that doesn’t hurt your account.
On the other hand, if you’re applying for actual credit you’re going to get what’s called a hard inquiry. These are actually going to affect your credit score and too many of them is going to affect your credit score by a lot.
In fact, inquiries are 10% of the total makeup of your credit score. If you’ve been applying for too many things that 10% is going to reflect badly and you could end up getting denied for something that you really wanted or needed.
18. Don’t Make Late Payments
This one should be obvious, but you want to make sure that you’re making all of your payments on time. If you’re late you’re going to incur penalties and interest and some bad marks on your credit report. Those bad marks are all going to affect your credit score, and that’s not something you’re going to want.
For those who have trouble remembering their dates and the times that your credit payments are due you can either set a reminder to let you know beforehand or you can set up automatic payments that will take care of everything for you.
19. Increase Your Credit Score
Your credit card is going to improve your credit score and help you to get the credit you’re looking for, if you know how to take care of it properly. Make sure that you are looking at the different options and that you’re paying attention to all of the different factors associated with your credit card. You can absolutely change the way you get credit based on where you are in the cycle.
If you’ve had no credit before you could go secured. Otherwise, a co-signed card might be a good option.